2012: San Mateo-based SolarCity hopes to raise $151 million in first IPO for solar installer

SolarCity workers install solar panels on rooftops at Hickam Communities at Joint Base Pearl Harbor-Hickam, where developer Lend Lease and SolarCity have partnered on the first SolarStrong-eligible project (Photo: Business Wire)

SAN MATEO -- SolarCity, one of the nation's leading rooftop solar installers, is seeking as much as $151 million in an initial public offering, according to a Tuesday regulatory filing with the SEC.

The company, whose chairman and largest shareholder is Tesla Motors (TSLA) CEO Elon Musk, plans to sell roughly 10.1 million shares at $13 to $15 a share, according to the filing. At $14 a share, the company would raise $141 million and have a market value of $1.2 billion. In a previous filing, SolarCity said it hoped to raise $201 million.

The company plans to list on the Nasdaq exchange under the symbol SCTY. Goldman Sachs, Credit Suisse and Merrill Lynch are lead underwriters. Its IPO would be the first for a solar installer.

SolarCity does not make solar panels but has moved aggressively to become one of the nation's top installers of residential and commercial systems. It has installed solar panels on the roofs of Walmart stores in Mountain View and San Leandro, and recently announced plans to install solar panels at nine schools and facilities in the Martinez Unified School District.

Founded in 2006, the San Mateo-based company pioneered the concept of a "solar lease," letting homeowners switch to solar power for no money down. The company has installed solar systems on nearly 45,000 buildings in 14 states, and intends to expand internationally. It has more than 2,000 employees.

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Solar stocks have been hammered by a global oversupply of panels and weakening demand in Europe. Though the lower cost of solar panels has helped profit margins for installers, SolarCity reported a $73.71 million net loss in 2011.

Some analysts warn that the solar industry's turmoil will continue, and question the wisdom of an IPO at this time. Oakland-based BrightSource Energy, which builds large solar thermal power plants in the desert, shelved its plans for an IPO in the spring, citing "adverse market conditions."

"It's an inauspicious time for the solar industry," said Paula Mints, founder of Solar PV Market Research. "The industry is still in turmoil. When you go public you have to lay bare the way your company works, and it puts you on the defensive at a time when you are trying to raise money."

Others say SolarCity could benefit by going against conventional wisdom.

"It's a lousy time, but I think being contrarian may not be too bad," said Ramesh Misra, an alternative energy analyst at National Securities Corp. "Every solar module seller is desperate to find any possible buyer out there, and module prices are crashing, which benefits Solar City. If Solar City's IPO is even moderately successful, a strong balance sheet could significantly help their leasing business."

SolarCity's regulatory filing includes red flags for potential investors, however. It is being investigated by both the Treasury Department and the IRS for possibly overstating the market value of solar panels when claiming cash grants. The Office of the Inspector General of the U.S. Department of Treasury has issued subpoenas to several companies in the rooftop solar industry, including SolarCity.

"We intend to cooperate fully with the inspector general and the Department of Justice," SolarCity said in the filing. "We are not aware of, and have not been made aware of, any specific allegations of misconduct or misrepresentation by us or our officers, directors or employees, and no such assertions have been made by the inspector general or the Department of Justice. However, if at the conclusion of the investigation the inspector general concludes that misrepresentations were made, the Department of Justice could decide to bring a civil action to recover amounts it believes were improperly paid to us."

SolarCity also says it was notified in October that the IRS was conducting an income tax audit of two of its investment funds. Its investors include Musk, Draper Fisher Jurvetson, DBL Investors and Mayfield Fund.

SolarCity's CEO is Lyndon Rive, an entrepreneur and native of South Africa who has been a member of the U.S. National Underwater Hockey Team. Peter Rive, his brother, is the company's chief technology officer. The Rive brothers co-founded the company with help from Musk, their cousin.

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.